Windows 8 won’t quickly revive PC market

Commentary: It’s going to take awhile for consumers to adjust

SAN FRANCISCO (MarketWatch) — If any investors are still counting on Windows 8 to bring a much-hoped-for revival to the personal computer industry this fourth quarter, it might be time to rethink that notion.

Reuters

Microsoft CEO Steve Ballmer at the launch event of Windows 8 in New York on Oct. 25, 2012.

Comments by executives during last week’s earnings conference calls by the biggest players in the industry provided no real guidance, beyond vague statements about how Microsoft Corp.’s
MSFT, -0.38%
next generation of Windows represents the biggest change in the software since the launch of Windows 95.

Microsoft’s biggest chip partner, Intel Corp.
INTC, +0.14%
was, for the most part, cautiously optimistic about the upcoming launch, but didn’t give any specifics in terms of its expectations for Windows 8. Peter Klein, Microsoft’s chief financial officer told analysts that the company was ramping production and was “excited about what we’ve heard so far, the feedbacks are great, the reviews have been really good,” he said. See Tell blog post: “Can Microsoft make Windows * pay off for investors?”

However, Intel’s chief executive, Paul Otellini, said the chip giant expects the PC business to grow at about half of normal seasonality. “How much of that happening is macroeconomic versus the timing of the Windows 8 builds and the share of wallet, war for tablets versus PCs is TBD [to be determined], and we’ll know a lot more about that 90 days from now after the Windows 8 launch,” Otellini said. Read Intel's comments about Q4.

Microsoft said more than 1,000 PCs and tablets have been certified to run the new operating system. During its big launch in New York on Thursday, Microsoft executives showed how easy Windows 8 is to use, with “everything you need right under your thumbs.” Read All Things D live blog of Win 8 launch.

Steep learning curve

But whether or not they sell is the big question. Consumers are going to be in for a major shift in how they use Windows, with Win 8 really geared for touch-screen computers, laptops and tablets, with a new interface like that of its Windows Phone software, that revolves around live, updated tiles and text. The potential for consumer confusion and dismay was already a theme in stories that started coming out last weekend.

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Microsoft seems to be assuming that PC users want to bring some touch features of the tablet to the desktop. Touch is mostly associated with media viewing and consuming and not necessarily creating content, which is heavily keyboard intensive.

“The user interface is designed really well for consumption, it seems to been designed with mobile in mind,” said Raluca Budiu, a user experience specialist at the Nielsen Norman Group in Fremont, Calif. “Those principals don’t necessarily translate to the desktop.”

Budiu said that she has been conducting tests with users of Windows 8 on a current PC which does not have touch-screen capability, which is how some consumers and business users may first begin to use Windows 8.

“It’s clear that the learning curve is going to be quite steep,” she said. “One of our users is an expert user, and he is quite proficient. He does not want to use Windows 8.”

Slow adoption

Of course, change is hard for everyone. Every time Microsoft unveils a major change in its operating system, consumers rebel. ZDNet pointed out that even the much-loved Windows XP had its initial detractors, before it became the operating system that many of us clung to in order to avoid having to use the ill-fated Vista. Read ZDNet blog post about Windows XP.

Some consumers, though, may rebel against being forced to adopt tablet-like computing on the PC. It’s even potentially feasible that Windows 8 could become like Vista, one of Microsoft’s more unpopular versions of Windows. This theory of mine, however, was debunked by wiser analysts.

“I think this is the big shift, it’s going to be widely adopted,” said R. “Ray” Wang, president of Constellation Research. “I think its going to have as broad a reach as Windows NT 4 and Windows 2000. This bigger than Windows 7.”

Wang said that Microsoft is moving in the right direction of the future of computing. “The touch phase is one of many interfaces we expect in the future,” he said. Voice activation, too, is picking up, with the wider use of Apple’s Siri and Google Voice in smartphones, as is motion, which Microsoft began to embrace with the Xbox Kinect gaming console. “The real question is how to navigate all these models and what use cases are best for what users,” Wang said. ”I think content creators will want keyboards and styluses. They never go away. I think consumers will take advantage of touch and motion.”

Forrester Research, though, agrees that the adoption is going to be slow, for the most part. “Early adopters will jump at Windows tablets. Beyond that, individuals and enterprises will be slow to adopt the new [user experience] UX,” wrote Forrester analyst Frank Gillett, in a recent report.

Gillett said that the lack of the Windows Start button, for conventional PC buyers, “will be off-putting,” which Budiu also confirmed in her research. Improvements — such as faster boot times, file history version backups, SkyDrive integration, and a single Microsoft account login — will be compelling to “power users,” or early adopters, Gillett said, but not enough to motivate many users to immediately make the jump. “For some, the prospect of learning a new interface will cause them to consider alternatives, most likely Apple’s Mac.” Google could also benefit, he wrote.

Personally, based on what I have read so far, I am going to try and keep my Windows 7 laptop as long as I possibly can. Other consumers who are averse to change may also feel the same way.

So this Friday, when Windows 8 goes on sale, investors might want to prepare for some bumps, just in case. This upgrade is not likely to be adopted overnight and it could take consumers time to get on board.

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